Bonds and the War on Inflation? - Dallas Commodity Company, Inc

Wheat

Posted on December 8, 2014 by Daniel Burkholder

Having recovered from wounds inflicted in last month’s break in wheat, my bull headed spirit wants to re-engage. There are two basic courses of action: futures or options (A combination of the two also). 1) Buy a futures contract and risk the trade to a close below $4.80 (loss of around $2000). Objectives are $5.44 ($1350 profit); $5.78 (+$3050); $6.65 (+$7400) & $6.91 (+$8700). This is not to say wheat cannot rally higher; profit potential is unlimited. Recommended investment per contract is $4000, though the margin requirement is only $1400 (There is also a one fifth size contract). 2) Buy call options; call option spreads; et al. The methodology: combinations of calls & puts, and strike prices utilized are boundless. This is something we would have to discuss (risk tolerance and money committed). With options, we can limit your risk to the amount you wish. Hence no major $ commitment is […]

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The risk of loss in trading commodity futures contracts can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. You may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or maintain a position in the commodity futures market.